Environmentalists and trade protectionists set trap for Gibson Guitar Co.

"On a sweltering day in August, federal agents raided the Tennessee factories of the storied Gibson Guitar Corp. The suggestion was that Gibson had violated the Lacey Act—a federal law designed to protect wildlife—by importing certain India ebony. The company has vehemently denied that suggestion and has yet to be charged. It is instead living in a state of harassed legal limbo.

Which, let's be clear, is exactly what its persecutors had planned all along. The untold story of Gibson is this: It was set up.

Most of the press coverage has implied that the company is the unfortunate victim of a well-meaning, if complicated, law. Stories note, in passing, that the Lacey Act was "expanded" in 2008, and that this has had "unintended consequences." Given Washington's reputation for ill-considered bills, this might make sense.

Only not in this case. The story here is about how a toxic alliance of ideological activists and trade protectionists deliberately set about creating a vague law, one designed to make an example out of companies (like Gibson) and thus chill imports—even legal ones.

The Lacey Act was passed in 1900 to stop trade in illegal wild game. Over the years it has expanded, and today it encompasses a range of endangered species. It requires American businesses to follow both U.S. and foreign law, though with most Lacey goods, this has been relatively clear. Think elephant tusks, tiger pelts or tropical birds.

That changed in 2007, when an alliance of environmentalists, labor unions and industry groups began pushing for Lacey to cover "plant and plant products" and related items. Congress had previously resisted such a broad definition for the simple reason that it would encompass timber products. Trees are ubiquitous, are transformed into thousands of byproducts, and pass through dozens of countries. Whereas even a small U.S. importer would know not to import a tiger skin, tracking a sliver of wood (now transformed into a toy, or an umbrella) through this maze of countries and manufacturing laws back to the tree it came from, would be impossible.

Furniture maker Ikea noted that even if it could comply with the change, the "administrative costs and record-keeping requirements" would cause furniture prices to "skyrocket." The wood chips that go into its particleboard alone could require tracking back and reporting on more than 100 different tree species.

Which is exactly what the Lacey expanders wanted. The drive was headed up by a murky British green outfit called the Environmental Investigation Agency. The EIA is anti-logging, and, like most environmental groups, understands that the best way to force developing countries to "preserve" their natural resources is to dry up the market for their products. They would prefer that wood be sourced from the U.S. and Europe, where green groups have more influence over rules.

The EIA was joined by labor unions such as the Teamsters and industry groups such as the American Forest and Paper Association. As Mark Barford of the Memphis-based National Hardwood Lumber Association told one news outlet: "We need the protection of the Lacey Act. . . . Our small, little companies cannot compete with artificially low prices from wood that comes in illegally. . . . This is our Jobs Act."

While everyone can be against "illegal" wood, what this crew understood was that the complexity of complying with an expanded Lacey Act would discourage companies from importing even legal wood. They went to Sen. Ron Wyden, of the well-timbered Oregon, who dutifully introduced legislation.

Mr. Wyden cleverly attached it to the wildly popular 2008 farm bill, guaranteeing its passage. Even then, some lawmakers sought to ensure that companies weren't unfairly ensnared. In October 2008, Louisiana Sen. David Vitter sent a letter to the Justice Department's Environment and Natural Resources Division (whose career staff is notorious for pursuing a green agenda), asking it to clarify whether any companies acting in good faith would be granted some protection from the law. The division has never clarified.

And so Gibson has been trapped, as intended. The company, after all, is not accused of importing banned wood (say, Brazilian mahogany). The ebony it bought is legal and documented. The issue is whether Gibson ran afoul of a technical Indian law governing the export of finished wood products. The U.S. government's interpretation of Indian law suggests the wood Gibson imported wasn't finished enough. Got that?

The EIA, which helped author the Wyden legislation, happens to have spent years publicly targeting Gibson for buying foreign wood. Oh, to see the Justice Department's communications with outside groups.

Gibson was picked because it is famous and, sure enough, its travails have scared importers away from an array of foreign wood products. Tennessee Reps. Marsha Blackburn and Jim Cooper are now working to give companies some protection and reduce paperwork. On cue, the EIA is howling that Congress is "gutting" Lacey.

Congress would be better off doing just that—repealing the expansion in its entirety. The provision does nothing to stamp out illegal logging—the products from which were already clearly no-nos. This isn't environmental protection; it's hostage-taking."